The establishment outsider.

Photographer: TOBIAS SCHWARZ/AFP/Getty Images

Merkel's Challenger Is Only a Pretend Outsider

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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A high-school dropout and former small businessman who only stopped himself from becoming an alcoholic by force of will at age 24: Is this new rival to Chancellor Angela Merkel a nationalist populist who can upset the balance of power in Germany by challenging the establishment? By no means. Martin Schulz, billed as Merkel's most serious competitor for the chancellorship in the Sept. 24 election, is as establishment as they come -- no demolition man, but a coalition man.

QuickTake Angela Merkel

After 23 years in the European Parliament, the last five of them as its president, Schulz has come back to Germany to lead the Social Democratic Party (SPD) in the election, displacing current leader, Vice Chancellor Sigmar Gabriel. He is being billed as the party's most potent weapon because his personal popularity in Germany matches Merkel's. But if this is the biggest challenge she faces this election season, Germany is the safest political haven in an increasingly turbulent Western world, the embodiment of a centrist dream. 

The SPD has served as the junior partner to Merkel's Christian Democratic Union since 2013. As such, it has been wildly successful -- on the surface. It hasn't only held key domestic and foreign policy posts in the coalition government -- Foreign Minister Frank-Walter Steinmeier is now the leading candidate for Germany's prestigious though weak presidency. It has been allowed to keep all its major election promises, too -- a nationwide minimum wage, which now stands at 8.84 euros per hour ($9.50), a "brake" for rents that allows cities to cap them when they grow faster than the national average, a pension reform that allows some people to retire at 63 rather than the norm of 67. In allowing a million refugees into Germany in 2015, Merkel acted in accordance with the SPD's pro-migrant policy rather than her party's own, and Germany's groundbreaking immigrant integration law bears the party's heavy imprint. One might argue that the Social Democrats have hijacked the government.

In reality, however, the opposite happened. Merkel has allowed the SPD its local victories while maintaining the conservatives' main target -- a deficit-free budget -- and without raising taxes on the rich. The SPD-proposed measures haven't made much difference, either. For example, the rent cap law isn't working as gentrification and a real-estate boom continue unabated. Merkel herself was passionate about helping refugees, but she has used the SPD to share the political responsibility for letting them in and for the bureaucratic and organizational problems that followed.

Since the 2013 election, both parties have lost popularity points, and the SPD has come no closer to beating the CDU for the top spot. If anything, Merkel has defanged the Social Democrats and turned them into the socially oriented arm of her party. In the language of academics who study coalition governments, it has fallen victim to the "unity-distinctiveness dilemma," losing its identity even as its policies were adopted by the coalition's leading partner.

The SPD, with a proud tradition that includes 20 years of leading post-World War II Germany, doesn't want to resign itself to that. Enter Schulz.

Gabriel has been frank about the reason for his decision to step down for the former European Parliament speaker. "Because he has better chances," he told a press conference. Schulz was away, in Brussels, so he's not perceived as part of the Merkel-led government -- an outsider, that much sought-after quality in politics in the last couple of years. He's a feisty campaigner, confident on the international stage, fluent in several foreign languages, and he has a welcome, small-town German background as a bookseller in, and then mayor of, tiny Wuerselen.

But does he have any policies to offer that Merkel would not embrace? He can make the traditional SPD arguments for investing in the education system and improving social security, but, as the current grand coalition has shown, his party can achieve these goals as a junior partner, too.

Besides, it probably won't escape German voters that Schulz ran the European Parliament as part of a very similar coalition deal between the Socialists and Democrats and the conservative European People's Party, which includes the German CDU. He suited the conservatives in Brussels, and he largely suits them as the top candidate for the SPD -- not least because, with pro-European Russia pessimist Schulz at the head, there's less chance of a different ruling coalition. 

The SPD has been trying out an alliance with the Greens and the fiery leftists from Die Linke, the successor party to the East German Communists, in a few local governments. Die Linke, though, is anti-establishment and pro-Russian. Schultz's candidacy will hardly be conducive to a deal with them. There is, of course, a chance that a desire to govern nationally for the first time since the Berlin wall fell will eliminate the differences, but even then the leftist coalition will need the support of pro-business Free Democratic Party to come close to 50 percent of the vote -- and the four parties will need to do better in September than they are doing now.

Merkel, cautious and skillful as ever, will not discount that danger, and she will seek to depress the SPD vote by all available means. But if this ends up the election's main collision, and no rough external shock propels the nationalist-populist Alternative for Germany party beyond its current 15 percent support, this will be a race from the pre-Brexit, pre-Trump past, a relatively placid campaign leading to another grand coalition with Merkel at the top and Schulz playing the tame socialist.

(In final paragraph, corrects reference to Merkel's strategy to depress the SPD vote, not the CDU vote.)

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story:
Therese Raphael at traphael4@bloomberg.net